ISLAMABAD – The Securities and Exchange Commission of Pakistan (SECP) has issued two concept papers to further the development of Pakistan’s short-term listed Sukuk market.
As per the press release issued by the SECP on Friday, these papers aim to initiate public consultation on key issues and suggest customized regulatory interventions to promote the listing of short-term sovereign and corporate sukuk instruments.
Pakistan’s capital market provides shariah compliant borrowing solutions to the Government of Pakistan (GOP) and the corporate sector. Therefore, a vibrant, listed short-term sukuk segment would enable various shariah compliant financial solutions and better cater to the needs of issuers and investors.
The GOP has been actively raising funds from the capital market through the issuance of sovereign Ijara sukuk instruments since December 2023. At present, the GOP has raised approximately Rs713 billion through 11 auctions by issuing different types of sovereign Ijara sukuk instruments of varying maturities (1 yr, 3 yr and 5yr) through PSX.
However, short-term tradeable sovereign sukuks with 3, 6 or 9 month maturities cannot be issued under the Ijara structure. SECP intends to explore alternate shariah compliant structures for issuance of tradeable, sovereign sukuks having 3, 6 and 9 month maturities.
Short-term sukuks are becoming increasingly popular amongst capital market investors. Corporates, however, prefer structuring such short-term instruments as privately placed and unlisted, even though this limits the ability to raise funds from a larger pool of investors. The concept paper on listing of short term corporate sukuks advocates avenues for making listing of such sukuks more appealing in terms of efficiency, procedural convenience and cost.
Possible solutions envisage facilitating issuers in issuing short-term listed sukuks by providing a condensed version of Shelf Prospectus/Supplement to the Prospectus/Abridged Prospectus, electronic publication of Abridged Prospectus, streamlining regulatory approval timelines, reducing regulatory costs, and providing flexibility in appointment of intermediaries such as CTI and underwriters etc.
